Recent intelligence from a real estate firm stating that rents for office space remain stable “has been judged in a very thin market where transactions are down” and “can only be poppycock”, says a consultant in the commercial property sector.
Tony Lorenz, who runs Lorenz Consultancy, told Facilitate: “[At the moment] landlords have a moratorium on rents and they are scratching their heads on what to do about downsizing.”
He said the “mentality of the needs of offices have changed” and liquidations and bankruptcies “are absolutely rife” and “the market has already collapsed”.
As a result of a recession “there will be 20 per cent less demand for office space”, similar to previous recessions, said Lorenz. However, he also pointed out that society has “enormously improved technology than during previous recessions”, making remote working much more sustainable and viable.
“I forecast a 20 to 30 per cent reduction in rental value,” said Lorenz. “It is impossible that rent will not fall by at least 20 per cent.”
Lorenz was responding to intelligence from Cushman & Wakefield, which shows that prime headline rents either remained stable or rose in all of the UK’s ‘Big Eight’ regional office markets in Q3, despite occupier demand being severely affected by Covid-19 restrictions.